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BW Businessworld

‘Zaakpay To Break Even In Next Two Years’

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With the advent of affordable smart phones and 3G services in India, the accessibility of internet on mobiles has increased multi-fold. The latest BCG report has also projected that the fee-based revenue from mobile commerce could be well over $4.5 billion by 2015 in India. Realising the need of the future, wherein e-commerce could be majorly dominated by m-commerce, ZaakPay has launched its payment gateway compatible with mobile phones that offers an easy user-interface to its consumers to make secure payments while shopping. Upasana Taku, Zaakpay's Founder & CEO speaks with BW Online's Tanuja Chatterjee about Zaakpay and the launch of their mobile payment gateway - mPay.
 
You have earlier worked with similar platforms such as PayPal, MobiKwik. What motivated you to commence with Zaakpay?
I have been fiercely passionate about how payments should work for consumers and businesses. I became the director and partner at MobiKwik in February 2010. It was here that I actually realised about the online payment issues faced by web businesses and consumers in India. Therefore I came up with this concept of payment gateway that is being practiced abroad for quite some time now. That is how Zaakpay originated with an aim to solve the payment pain points for eCommerce in India.
 
How does Zaakpay function? Could you also mention the payment strategy involved?
The Zaakpay payment gateway for websites i.e. "WebPay" includes everything required to connect your online business to your Internet merchant account.  WebPay provides an intelligent and integrated online payment processing solution for empowering organizations to accept credit cards, debit cards and also accept payments through net banking payments. With the help of Zaakpay your business can now reach a wider audience across the country by enabling your e-store to start accepting credit cards and other payments online. 
 
Zaakpay's current solution Webpay charges merchants a monthly subscription fee of Rs 500, along with a per-transaction fee of 3 per cent. Our cost to each transaction is amongst the cheapest in the Indian market. We enable merchants to start collecting payments without paying anything upfront.
 
How will you differentiate Zaakpay from other e-commerce payment gateways? With established gateways in the market such as PayU, CC Avenue, how do you think your platform is accepted by audience?
At Zaakpay our customers complete an online merchant application (we require no paper work) leading to fast approvals. We have the fastest merchant account approval records of all the payment gateways in India and we get a merchant up and running in 24hrs with payment integration. Specifically for mobile payments, we are the leader of the pack. There is no payment company in India which has created an in-app or mobile-web solution that actually works. We have processed more than 10Cr of mobile payments in last 2 months!
 
What is the security mechanism that you are following?
We use checksum based security to perform handshake with merchant website or mobile application. The algorithm used is HMAC SHA-256. Our internal systems are PCI-DSS certified as per VISA/Mastercard guidelines.
 
Since the inception of Zaakpay, how has it flourished in terms of clients and other arenas? Kindly provide numbers and names of your clients
Starting with just five customers, ZaakPay currently has 170 clients, including websites portals like Exotel, Oravel, Oklisten, BpbWeekend, Hitwicket, Onlineteleshop, Almostfree, etc. It clocked a top line turnover of Rs 80 crore between April and Dec 2012, thanks to the funding from Sequoia Capital last year. It has a 12-strong team in Delhi and one person in Bangalore. ZaakPay expects to break even in the next two years and is eyeing a top line revenue of about Rs 200 crore in the next fiscal year.
 
Choosing payment gateways is still a taboo in India. How does that affect your functioning? Also what are the issues you face?
Electronic commerce and mobile commerce are emerging areas in India. Whether it is an existing brand venturing into e-commerce or a new upstart, most merchants have little idea on what to look for when choosing a payment gateway. The worst part is that little information is available on the internet and whatever is available is quite confusing. We get all kind of enquiries from merchants and we try our best to answer them, without caring about whether they sign up with Zaakpay eventually or not. 

RBI has issued that all payments made to Indian business accounts via Paypal should be brought into banks in India. Does the same rule apply to Zaakpay as well? Do you think such guidelines hamper the functioning of foreign players in the Indian market?
Any cross-border payments, which is the forte of Paypal, can be used for money laundering which is the key concern for RBI. PayPal is not an Indian company, so far they have been doing only cross-border business in India, which is why RBI has been unable to completely regulate them. When PayPal starts offering domestic payments in India, they would have to create an Indian company and would be completely regulated by RBI to offer payments in India. Zaakpay is an Indian company and follows the RBI's directive for payment intermediaries.
 
What is the revenue model of Zaakpay?
The pricing for Zaakpay is lucrative with a free trial that simulates the transaction in a sandbox environment. For startups, there is a one-time account fee of Rs 5,000. Any company with transaction volumes under Rs 5 lakh per month falls under this category and will have to bear a 3 per cent card transaction rate along with an Rs 500 monthly subscription fee. There are other options, 'Business' and 'Enterprise' for higher volumes.
 
Other than webpay, Zaakpay also will also offer mPay, a mobile payment solution. Mpay incorporates two payment solutions for the mobile medium. The first is a mobile web (browser-based) payment solution. It can work on all popular mobile browsers. Second is an In App payment solution, for which user does not need to open a browser. The transaction can happen in the app itself. This solution is available for Android and iPhone apps. 
 
The revenue structure of mPpay is percentage per transaction. We charge our customers (mCommerce, digital content, subscription services) a fixed 3-9 per cent of every payment depending on the business category and scale. 
 
Kindly tell us something about mPay. What do you think about its acceptance in our Indian market.
mPay  is Zaakpay's mobile payment processing solution for brands/retailers which enables them to collect payments via the mobile. With Mpay, users can buy easily on the go using their mobile phones.
 
mPay offers two payment solutions for the mobile medium. The first is a mobile web, browser-based payment gateway solution that delivers on websites optimised for mobile devices with which the consumer interacts using the mobile device's Web browser. Customers can browse for products and services and purchase from a retailer in much the same manner as through the retailer's e-commerce web site. The major difference is that the interface is optimized for the resolution and display space available on the mobile device.
 
The second is an In App-based payment solution, which relies on applications that can be downloaded to and run natively on a smart phone - on both Android and iPhones. Customers can browse, select and purchase from a retailer using the app and within the environment created by the app. Since the transaction happens in the app itself, no mobile web browser is opened to complete the payment. In-App payments are zippy fast, user friendly and result in fewer drop-offs.
 
In the Indian market, as of late 2012 mobile internet usage has surpassed desktop internet usage. As a result, eCommerce players in India are making a run for launching their mobile websites and mobile applications in 2013. Top eCommerce players like Flipkart, eBay, Snapdeal, Homeshop18 all have mobile apps and mobile sites however, most accept only CoD (Cash on Delivery) orders on the mobile. 2013 is when we will see a lot of players focus in optimising their mobile applications for user experience and payments. Digital content/gaming players have been using Google wallet and iTunes payment options in their apps however, what they dont realize is that Indian debit cards and Indian netbanking payment options are not accepted by Google wallet. In India, net banking and debit card users comprise 80 per cent of the online buyers since credit card users in India are a minority. 
 
Your future plans…
We are working towards making mobile commerce a reality in India. More Indians will transact on mobile in the coming years than they do on computers. With the advent of cheap smartphones , especially Android, millions of Indians will have sufficient power in their hands to make payments instantly using data networks. We are creating specific solutions for mobile websites and mobile apps which allow them to collect payments from users in a simple and secure manner.